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PERS flip resulted in pay hikes for many county employees
YOUNGSTOWN
Pay increases due to a Public Employees Retirement System “flip” were widespread across the county payroll in 2013.
These occurred in the building inspection, microfilm and recycling departments and in the offices of the recorder, treasurer, auditor, sanitary engineer, clerk of courts and board of elections.
In one PERS flip, which the county commissioners approved in July 2013 as part of a Communications Workers of America Local 4300 contract wage reopener, 15 employees of the county’s building inspection, microfilm and recycling offices got an 11 percent pay raise but had to begin paying their full 10 percent of salary employee share of PERS contributions.
The additional 1 percent was due to the income-tax impact of the raises. The additional percent kept employees at the same take-home pay level they were at before the flip.
Until this change, those employees paid only half of 1 percent of their salaries into PERS, and the county paid the rest of their share. The county also paid its share of funds into PERS for each employee — an amount of 14 percent of the employee’s salary.
origin of PERS piCKup and flip
The practice of county pickup of employee contributions to PERS in lieu of wage increases originated in numerous union contracts negotiated over a 10- to 20-year period, said Dave Ditzler, county commissioner.
Anthony Vivo, clerk of courts, said it was cheaper for the county to pick up employee contributions to PERS than to give pay raises because the PERS pickup was paid only on regular time, not overtime. Any wage increase would raise the regular and overtime pay rate.
Not increasing the workers’ wages could help them avoid paying higher income tax, said Rich Sandberg, president of Teamsters Local 377.
A PERS pickup does not count as taxable income for federal and state income-tax purposes, but it is taxable income for purposes of municipal income and Medicare taxes, said Tom Lyden, county payroll supervisor.
Ditzler said it was more fair to employees to give them compensating pay raises in a PERS flip than simply to ask them to begin paying their full employee share of PERS without any compensating raises.
Vivo said the commissioners asked him to support a PERS flip for his employees because they said the public would look favorably on employees’ paying their full PERS share.
One reason for doing the flips, where the county can afford them, is to allow for more-accurate comparisons of county employees’ salaries with those of their peers, Tillis said.
“That raise that was given back then [in the form of a PERS pickup] is now put up into the salary so that you see what that true salary is,” Tillis explained.
Vivo said senior employees benefit significantly from the salary increases associated with the flip because retirement benefits are based on the average of the employee’s highest-earning years.
“It does benefit employees at any age,” said Sandberg, whose local negotiated a PERS flip for employees of the county treasurer’s and dog warden’s offices.
not cost neutral
All of the flip stipulations were designed to not have the PERS flip cost employees any of their take-home pay.
But the flip is “not cost-neutral” to the county, said Karen U’Halie, county human resources director.
Because the employees’ wages are increased, the county pays out more dollars in its share of PERS (14 percent of the employee’s wages), more money in its share of Medicare taxes for the employee, and more in Worker’s Compensation premiums, she said.
“Anytime you have a pay increase, it has a ripple effect, and once that pay gets increased, it keeps going,” U’Halie said. “It’s not like: ‘We’re going to give you this increase for one year and then take it back.’ It’s going to be an ongoing expense,” she added.
Ditzler said, however, such flips have been “pretty close to cost-neutral, within 1 percent of being cost-neutral.”
Audrey Tillis, county budget director, said, “It’s not cost-neutral to the county. We try to make it cost-neutral to the employee.” She said, however, many county departments have been able to absorb the cost of a flip within their budgets.
In the case of a new three-year Teamsters Local 377 contract for four supervisors and two lawyers at the Child Support Enforcement Agency, which the county ratified in February, U’Halie said there was no PERS flip because it was “cost-prohibitive” because CSEA was facing a $200,000 budget deficit.
Those employees got no pay raises, but they continue to pay only a half-percent, while the county pays the rest of their 10 percent share of the PERS contribution.
The lawyers earn $66,500 and $71,500, and the supervisors earn between $59,400 and $62,000 annually.
Tillis said a PERS flip was also cost-prohibitive for union employees in the sheriff’s office, where the flip would have cost the county almost $200,000.
“A lot of employees want the flip. Right now, we can’t afford anything,” County Commissioner Carol Rimedio-Righetti said.
highly paid pers flippers
Some of the county’s highest paid employees received the PERS flip in 2013, including Joyce Kale-Pesta, elections director, and Thomas P. McCabe, deputy elections director, whose 11.2 percent pay increases raised their salaries from $65,776 to $73,143 on Jan. 13, 2013.
In the treasurer’s office, a PERS flip on Dec. 15 boosted the salary of Jamael Tito Brown, operations director, from $50,003 to $55,494 and Marilyn J. Abramski, head cashier, from $47,730 to $52,978.
Increases due to PERS flips boosted the salary of William M. Coleman, office manager in the sanitary engineer’s office, from $87,630 to $90,875 on June 2; and that of Carol McFall, chief deputy county auditor, from $84,700 to $87,834 on Feb. 24 and then to $91,084 on Dec. 1.
PERS flip raises boosted the pay of Jacob A. Williams, county information technology director, from $84,124 to $87,237 on Feb. 24 and then to $90,459 on Dec. 1.